Discussion Topics

ISS is working on 2015 Policies. They know that professionals in the field (internal experts or external consultants) don't always agree with how ISS looks at equity compensation. Here's your chance to give them some guidance, instead of the other way around.

I asked Global Research ..ISS Governance the following question in April 2017.

What is the purpose of the issuer, in their Plan Document and /or the Grant agreement, giving discretion to officers and directors to either deliver shares or to deliver cash for tax withholdings required when Restricted stock, RSUs, or Performance shares vest?

The answer was

F​or large grants where the tax liability is significant, allowing for stock withholding is a big benefit for the award holder. It's mainly done to provide flexibility to the award holder.

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I have possession of a letter from Skadden Arps saying essentially the same thing and that companies must give the executives that feature to be competitive.

Question:

Now where does the big benefit come from?

Answer:

The benefit comes from giving the officer or director the ability to trade on inside information since the issuer must accept the disposition.

Giving the officer or director the ability to sell shares based on inside information with the issuer, often at prices about current market prices ,is a violation of the officer or directors Fiduciary Duty